Opening Coca-Cola Company into China - Essay Example

? Strategic plan project Coca-cola Company, which is the leading producer, distributor and retailer of non-alcoholic beverage drinks, is planning to set up a branch in China. In addition, the company will introduce a new beverage brand comprising of chocolate as the main ingredient into the Chinese market (Fair Disclosure wire, 2012). Consequently, as the appointed manager of the intended Chinese branch, I ought to come up with a viable strategic plan that will ensure the success of the new brand in the Chinese market. Through introducing the product into the Chinese market, we will be able to meet a great demand for a sweet soft drink to cater for people who wish to drink but do not take alcohol (Fair Disclosure wire, 2012). Besides, Chinese cities encompass many people working on daily basis in the cities. The latter people prefer to have their lunch meals from the many fast food joint in the Chinese streets. However, these joints luck a proper drink that customers can take while eating. Chinese people have an immense love for fast food. This is evident from the many fast food joints in the major cities like Hong Kong and Beijing. Greater portions of the market share who buy food have had to shift from traditional full service restaurants towards fast food establishments. Besides, Chinese market size of fast food and beverage takers is overwhelmingly great because of fast food service providers as well as higher income earners in the market. Additionally, the market for beverage drinks is increasing rapidly because of the great growth of fast food market that go hand in hand with beverage drinks. Besides, with the current growth trends facilitated by improvements in chain store, franchising management, and new brands as well as food styles, beverage industry is bound to become even stronger. Coca Cola Company owns 75% of the market share of Chinese beverage consumers (Fair Disclosure wire, 2012). The market share tremendously increased to 75% when Coca Cola Company purchased the China Huiyuan Juice Group Limited, which owned 42 % of the Chinese juice market The Company is one of the favorite producers of beverages in the Chinese market with brands such as Fanta, Minute Maid and Sprite (Fair Disclosure wire, 2012). Besides, the company also commands a great following of the Chinese market share with the many job opportunities it provides to Chinese citizens. The company through the chocolate flavored drink that it intends to roll out in the Chinese market boasts of a 15% potential customer scale. The latter is from a recent study, which showed 15 % of people in china loved coca-cola products but preferred a different flavor of drink besides the one Coca Cola Company currently provides. In addition, about 32% of the population that takes chocolate flavored drinks from other fruit juice companies. These companies provide the drinks at a higher cost than the intended cost that Coca Cola Company will provide the chocolate flavored drink. This assures my company of 47 % prospective customers who will be taking our products once it gets into the market. Coca cola intends to invest $4 billion in the china market with building new plant and renovating the current plans. The latter is because of the need to increase the market share and meet customer needs, which are part of the company’s, 10-year strategy plan. This is happening at a good time when we are rolling out a new beverage drink brand into the market. However, even as Coca Cola Company intends to increase our markets share in china by introducing a new brand into the Chinese market. We cannot ignore the intense competition that we receive from the diverse competitors that provides similar products in the Chinese market. Competition in china’s beverage industry is severe and the market sales highly depend on how much the company is promoting its product.  For instance, companies like Pepsi Company, which is also a beverage producer as well as Hangzhou Wahaha Group, which is a local cooperation that also produces drinks (Fair Disclosure wire, 2012). Pepsi is the greatest competitor in the market being the world’s second largest soft drink producer as well as because it is vastly investing in the Chinese market with opening new plants (Rudarakachana 2013). Besides Zam Zam Cola and Parsi Cola companies are also on the verge of becoming threatening competitors to coca cola company in Saudi Arabia because of the varies traditional drinks that they offer in the market (Fair Disclosure wire, 2012). All these companies are vibrant competitors who provide soft drinks in the Chinese market. This competition encourages companies to seek other means in order to increase their sales and make good profits. We intend to offer a promotion for the new chocolate flavored brand when it gets into the Chinese market. The latter entails giving out free T-shirts and caps for every soda bought while those who purchase more than three drinks will receive an additional free drink. The promotion is out to ensure that the products becomes accepted in the market and reach as many people as possible in order to establish a perfect competition for other companies. Through the companies plan to invest $4billion in china to increase its market share half of the amount will serve as capital to get the new brand in the Chinese market. Even as we brainstorm on the best way possible to roll out our new beverage drink that comprises of chocolate as flavor, we have to think of the strength weaknesses, opportunities and threats that the company might encounter in its new Chinese market. Strengths The major merit that my plant has while we intend to produce a new beverage brand into the market is the availability of funds provided by the mainstream, which is coca cola. Since, this will be a major boost to the new plant and its objective product because it will enable the plant to introduce and efficiently promote the product in the Chinese market without any problems. Besides, Coca Cola has renowned public relations with the Chinese market because of the many initiatives and environmental friendly programs it supports in china. The latter is also an advantage to the introduction of a new product into the market because coca cola as the head company commands a great market share, which will embrace the new product. Besides, with the recent diversification of the fast food industry in china, the release of a new product into the market could not come at a better time. The consumption of fast foods like Burgers and French fries go hand in hand with beverage drinks. Therefore, these recent developments in the fast food industry and as well as consumption rate are significant advantages that will boost the sales of the new product. Weaknesses However, the introduction of the new chocolate flavored drink in the china beverage market also suffers major setbacks because of various demerits on the company as well as the market. For instance, in the recent past Chinese press reported that Coca-Cola Company puts its workers under bad working conditions with little pay. The Chinese press reported that Coca-Cola employees work for long tiring hours, face arrears as well as cut backs in their pay besides having little protective gear. The latter bad publicity affected the company’s sales because they drastically reduced with many consumers opting to purchase products from competitor companies. Besides, the plant suffers the risk of the market not fully embracing the new brand because of the diverse traditional drinks taking the market. Various local companies are now producing beverages that they integrate with Chinese traditional delicacies making a greater portion of the consumer market to opt for the products others than the normal beverages. Opportunities However, despite the entire shortcoming that will be against the introduction of a new chocolate flavored drink in china. There are several opportunities that Chinese market has for the new product. For instance, china is experiencing a massive diversification of the fast food industry in china and the availability of high-income earners among the china employment circle. The latter aspects create a good opportunity for the sale beverage products in the Chinese markets. Threats Chinese market is now opting to buy products from their local companies other than products affiliated to foreign companies like coca cola. The Chinese government is openly advising its citizens to promote locally made products like that of Zam Zam Cola In order to boost the country’s GDP (Rudarakachana 2013). This poses a possible threat to the new plant that we are about to set up in china with a completely new product because the reception of the consumers might not be as good what we anticipate. Technology assessment China is increasingly becoming the hub on technological advancements in the world. The country and norms of people mainly revolves around technological facilities in their daily business. In order for business to survive into the Chinese market and realize their full potential in terms of sales of products, they ought to utilize the technological facilities presently used in china.  In addition, the plant also plans to incorporate other technologies evident in other countries to attain a competitive advantage in the market. For instance, we plan to introduce ecommerce with our product in the Chinese market. The latter will entail online purchase and free delivery for consumers located in a near proximity to where the plant will be located. In addition, we plan to establish An Electric Automated Beverage Dispenser in as many fast food joints as well as social setting that will make the product easily accessible to the market. This will aid in increasing our sales because it will be easily accessible to the consumers at a low cost. In addition, we plan to diversify the merchandise by allowing the machine to scale the amount of drink a customer will get in proportion to the amount of money they deposit into the machine. This technology will spearhead the product to become the number one product of choice the beverage consumer market because it will be readily available at any cost that the customer wishes. In addition, we will have Automated Vendor Machines in the Chinese market at many points as possible in the cities. Besides, we will have vendors walking with the machines on their backs in social settings to sell the products. All the machines are readily available in Chinese manufacturing industry and plan to get technicians who will integrate an electrical machine as well as scaling format are underway. Supplier markets assessment China is one of the most populated countries in the world. Besides, it comprise of many semi skilled and skilled people in their population that will play a major role in the new plant. This is a merit to the business, because it enjoys a large pool of labor availability in the Chinese population. Besides, the educational system in China is more technical with many technical skills that provide fundamental skills needed in manufacture of beverages. In addition, china is a greatest market to beverage companies in the world being the third largest consumers of Coca-Cola beverage products (Hird & Gilligan 2012).These markets need the best quality of product as well, good prices for the local consumer because they take a major portion of the entire company’s sales of beverage products. Besides, china entails many traditional as well as diverse holidays in diverse province. Therefore, the plant is bound to receive a good reception by immense sales in Chinese markets via selling many products in these holidays. In addition, Chinese culture encourages a lot of drinking for its people. Foreigners in china commonly refer to china as a “drinking nation” with many people going for a drinking spree in the night. However, this inconveniences many people who dot prefer alcohol. Through setting of many Automated Vendor Machines at these bars, people who need an alternative to alcohol will take our product. Besides, buyers of beverage products in china concentrate in major cities like Hong Kong and Beijing. We intend to set up the plant in Hong Kong to ensure we maximize our sales in the major cities. Current economic situation Currently China’s economy is steadily growing with the country’s national income increasing moderately. Enhancing technological alteration besides yield strengthens basis for quick improvements in terms of living standards. A greater percentage of the Chinese citizens earn a good income ever since the government issued a policy to increase salaries of workers with 20%. The country is soon recovering from the 2011 inflation and many people can now afford to live modest life. This is a great advantage to the introduction of a new product as a greater percentage of the population can afford to purchase the product. Significant government regulations Chinese government’s regulations prove to be both good and bad to our intended investment in china. For instance, china regime recently rolled out a 5-year strategic plan towards raising the state’s economic goals. The strategic plan by the government emphasizes radical economic reforms in china that include increased consumption of locally made products (Rudarakachana 2013). This is because the regime intends to promote local industries and avoid the massive consumption of imported goods. However, china has not made major steps towards realization of this strategic plan. In addition, china economy remains with many barriers that may prove difficult for introduction of a new product in the market. The latter is because legal system in china is extremely vulnerable and prone to political influence besides communist party derives. The communist party dictatorial rule across the economic system undermines rule of law and respect for contracts (Rudarakachana 2013). Mission: Company Committed to provide tasteful, healthy and nutritious beverage drinks that meet customer satisfaction from all social levels. Coca-Cola is a beverage company, which majors in manufacture, distribution and retail of beverage products all over the world. Coca-Cola boasts of being a company with one of the best management body evident from the vast awards that the company has worn. The company only achieves its good performance record because it embraces good work policy that base on unity in diversity in all their plants. The latter implies that a certain plant does not employ only people from the location but encourage employment of staff from all over the world. In addition, Coca cola is a major company, which invests a lot of innovation in the beverage industry. The company came up with the automated vendor machines as well as the automated beverage machines that are essential in making drinks readily available to consumers. In addition, Coca-Cola Company provides employment opportunities to many people in china and the entire world. The company strives at its best to provide good working environments for all its employees. This is through provision of protective gear, giving promotion to qualified staff as well as taking unskilled employees for further training. Besides, Coca-Cola company boasts of a renowned reputation in provision of sponsorship funds on community based projects as well as international activities like Olympics. The company stands out from other corporate organizations for meeting customer satisfaction standards on its products. The company engages in consumer research after every six months to find out what customers love about their products and what the consumers wish integrated in their products. In addition, according to research, Coca-Cola is one of the richest corporate organizations. Consequently, the company is well employs exemplary staff to take up managerial positions in their various plants therefore doing very well in the beverage industry through conducting excellent marketing policies in all the markets globally. Key corporate weaknesses However, despite all the strengths and merits that Coca-Cola possesses in all their activities, the company still has various weaknesses. For instance, Coca Cola Company does not conduct a proper research on the various consumer markets that they invest in to know clients’ preferences. The company only offers the same brands of beverages it did several years before to all the markets it invests in globally. In addition, Coca Cola Company does not provide e-commerce sales for consumers who wish to purchase goods from an online platform without necessarily going to vendors to purchase goods. The latter is a major setback for the companies mainly because the world is becoming a global village through the internet and many businesses opt to operate their activities from an online platform. Additionally, Coca-Cola Company never considers merging with other small companies in the corporate scene that provide the same beverage products. The latter will be a major step that the company will take to ensure it acquires a competitive advantage in the market. Coca Cola Company ought to alter some aspects how it conducts its operations in order to attain a competitive advantage in the beverage market over competitors like Pepsi company. For instance, while the company conducts consumer research activities about their operations it should also consider enquiring on preferred brands that consumers want. For instance, in the Asian countries, coca cola does not provide a vibrant competition to the local beverage companies because they produce beverage brands that have traditional ingredients in Asia. This makes the local companies to have a competitive advantage over Coca Cola Company. The latter organization ought to produce beverage brands with traditional ingredients to consumers at various countries. In addition, coca cola should invest majorly on e-commerce and conduct sales from an online platform to consumers globally. The latter is because research depicts that 52% of consumer in all industries prefer conduction online purchase of products. Coca-Cola should also merge with other local beverage companies in all the markets that they invest. Merging with smaller business would ensure they achieve a competitive advantage in the market by bring major producers and increasing our market share. Assumptions Even as Coca-Cola is due to set up a plant in china to provide chocolate flavored beverages, there are various factors to consider that may likely affect the entire Chinese beverage market and cause it to shrink entirely. These factors range from political, natural as well as economic basis depending with their origin. For instance, countries in Asia like china are prone to natural calamities like floods, hurricanes and typhoons, which cause a lot of high degree disaster to the people. These natural calamities in most instances displace people and damage their properties making them vulnerable to purchase products like beverages. Besides, they might cause mass death of people in a certain area therefore reducing the numbers of consumers in the location affected. In addition, political interference through rules as well as civil wars are factors that might cause the market for our new product to shrink drastically. For instance, when disagreements between two agendas in government occur, civil wars may occur among citizens. Consequently, the market will reduce drastically causing massive loss counts for the business. Besides, the economy of the country might be at stake through inflation. The latter may cause financial constraints amongst many beverage consumers resulting to prioritization of their earnings. Besides china frequently experiences inflation in her economy making the government to come up with policies that affect foreign investors in china. In addition, policies put up by the Chinese regime in an attempt to promote local companies might make the market to shun away from our products. For instance, increasing taxes for foreign business located in china and exempting local business from taxes. Several competing companies in the beverage industries like Pepsi Company in the Chinese market are now coming up with strategies of having a competitive advantage over coca cola (Rudarakachana 2013). For instance, Pepsi Company, which is the major competitor to coca cola in the Chinese market, has come up with short term and long term strategies on how to remain relevant on the Chinese market. Pepsi Company decided top franchise Tinyi a fast food company in china in the next two years (Rudarakanchana 2013). Besides Pepsi also came up with a overhauls strategy that will enable the company save $1.5 billion. The latter entails ramping up advertisements and retrenching several employees (Hird & Gilligan 2012). In addition, other companies like Uni President Entreprise Corporation in the Chinese beverage market opt to produce traditional beverage brands as a shot term strategy towards attaining competitive advantage in the market. The company is strategizing on how to produce Crystal sugar peer juice, which will encompass of traditional flavor associated with Chinese cultural drinks. Already research shows that the drink commands a massive following of potential consumers. Technology will play a major role in ensuring that we maximize our sales. We intend to integrate the use of e-commerce that will stream line online sales in the near future. This will make us realize good sales and make our products readily available in the market. Besides computers are very efficient and are readily available in the market. We intend to maximize our sales during the many national traditional holidays in china that consumers tend to consume many beverages. We intend to increase seller concentration as well as the automated vendor machines in the venues to ensure we make our products readily available to the consumers. In addition, we intend to diversify the cost of production of our products in order to make the final pricing be consumer friendly. In addition, future investments of our plant focus on increasing production volumes to meet client demands in the Chinese beverage market. China government is putting up proper policies to avoid inflation on the economy in future and create many employment opportunities for her citizens. The latter aspects will positively affect sales of our products in the Chinese markets because many people will be able to afford the goods. China is home to many tourist attractions that attract millions of tourist worldwide. Some of the attraction sites include China tours, The Great wall of China and china small group holiday. The latter event and sites provide strong opportunities for us to make good sales by providing drinks for tourists to refresh themselves. In addition, the plant already has a long-term plan to integrate use of Chinese traditional tastes in our drinks. This will also provide a sound opportunity to increase our sales in the region and have a great market share. There is only one major development in china, which will influence our business in terms of sales. The Chinese government rolled out a 5-year strategic plan to promote local businesses. If the Chinese regime strategic plan of regulating foreign investors in china and promoting local business pushes through, our business will face adverse impact on sales volume on a long term scale. Our business plans to apply an integrative marketing approach that utilizes all possible market entries such as direct marketing, one to one marketing and mass marketing. The latter approach will enable us reach the greatest number of the market within a short period and enable us gain an early competitive advantage over other plants. Through coca cola, which is my parent company we plan to, establish partnerships with local beverage companies in order to have an exemplary market entry as well as have an immediate beverage market share in China. We are planning to set up a fully owned subsidiary plant with coca cola as the parent company owning 100% of the plant’s stocks. All the resources, funds and executive decisions will emanate from coca cola the parent company. Cocacola, which is our parent company, is a company known for its renowned profitability and growth in the beverage market. Coca cola enjoys a great market share in all its global markets and makes annual earnings of about $800 million dollars through sales. China has a great beverage consumer index (Fair Disclosure wire, 2012). According to research, china is soon overtaking United States in beverage consuming. Our day-to-day running of the plant entails making sufficient production to meet customer demand using a low production cost. Besides, Coca-Cola manages the plant through employment of qualified staff. Based on the research conducted on Chinese market, we are sure that the business will succeed and equally become competitive in the Chinese beverage market. References Fair Disclosure Wire. (2012). Q4 2011 the CocaCola company earnings conference call - final. Fair Disclosure Wire. Retrieved from http://search.proquest.com/docview/922538666?accountid=458 Hird, M. & Gilligan, C. (2012). International Marketing (RLE International Business): Strategy and Management, New York: Routledge. Rudarakanchana, N. (2013). PepsiCo (PEP) And Coca-Cola (KO) Expand In Emerging Markets But Struggle In Americas. International Business Times. Retrieved from: http://www.ibtimes.com/pepsico-pep-coca-cola-ko-expand-emerging-markets- struggle-americas-1402662 Read More